How to effectively tackle my credit card balance

I joined the debt paydown challenge this year thinking no problemo! And I was doing really well. I got my $4000 CC balance down to $1900 in only 4 months. But then, you know, life happened. Our old beater car broke down and we decided to buy something newer/more reliable so we could avoid costly repairs and save money. Little did we know, newer cars also cost a lot to maintain. 🙃

At this point I have increased my monthly expenses by $375 for car payment/insurance. I also had to put $1086 on my credit card for new brakes and a battery. And then we had to move! So there's an extra $500 on my credit card and I could literally cry if I wasn't so mad. 😑

Normally I would just roll with it, like okay I'll just make some adjustments and pay off my balances slower. But I'm potentially quitting my job in September and won't have an income. I was hoping to start school with this balance paid off, but that seems completely unattainable at this point. 

I have about $13k saved (might be more like $16K by September) so I don't have to work while I'm in school. It's wrapped up in my pension plan right now earning interest. But that's barely enough to cover my living expenses during the 6 month program and that's not including the cost of the course which I haven't figured out what I'm going to do about. 

Anyway, that's how I got into this mess and now I'm brainstorming ways to get out. There's no way I can pay off the balance before I start school. I don't even know if I can make a dent in it, tbh. I really don't want to delay my start because it's been so hard to get in already.

I was thinking of paying off the balance when I get my pension savings. That will be one less monthly bill to worry about, but then I might need to get a part time job or something. I'm trying to avoid having to work so I can focus on school. 

The other option is to just let sleeping dogs lie, let the balance sit there. I can pay the $80/month minimum payment which includes a portion toward the principal. That way I have the money I need to live and I guess paying it isn't a big deal. Literally going back to where I was a year ago. 🤷‍♀️

I'm really unsure of which way to go with this. Or maybe there's a third option I haven't considered. I'm hoping for some guidance or like... permission to carry a balance or something. lol I don't know. It just breaks my heart seeing that balance after all my hard work...

Does anyone have any advice? 

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  • I don't have any specific advice for the time frame that you mentioned, but I have been in your shoes. I spent a lot of years paying down debt only for emergencies to occur that then added to my debt. 😭It was exhausting and definitely felt like I'd never be out of debt. I'm still not, to be honest, but I do see the light at the end of the tunnel. It wasn't until I really lived by rule 2 that I started making progress. For me it was saving for Christmas (as if it was ever a surprise when it rolled around 🤦‍♀️), but my car maintenance category wasn't without fault.

    I guess my advice is: rather than focusing on clearing out that debt, first take a closer look at your true expenses and make a plan for those. They will continue to occur even when you are in school! I'd err on the side of paying down less debt in order to be more prepared for true expenses. You'll get the debt paid off - slow and steady.

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  • It’s so frustrating to feel like you took two steps forward and one step back. It happens, but remember to be gentle with yourself.

    As far as actual money advice goes, how is your credit score? If it’s in the good-to-excellent range, you may be eligible for a balance transfer credit card that comes with a 0% introductory APR. Many intro APRs run for at least 12 months, so that will last you through your school program, in which case you can continue making the minimum monthly payment without accruing interest. But keep in mind that most balance transfer cards have a 3%-5% balance transfer feel, so depending on your current balance, that might not be worth it. This resource can help you find the best credit card for you for balance transfer -  https://www.credello.com/credit-cards/balance-transfer-credit-card/

    Good luck! You got this!

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    • ryan_themoneyguy I was going to suggest this, too, balance transfers can be life savers.

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  • Having a credit card is great but I actually think that it's still best to only use it for important things. That way, you won't be able to be stressed about the debt that comes with what you bought. That will make it more manageable.

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  • Adulting sucks sometimes, doesn't it?

    Kudos to you for working on your education, and way to go for having so much set aside so that you don't slide into debt while you're in school. That is HUGE.

    Here's the good news - you've got YNAB on your side, and it has a wealth (pardon the pun) of information for you.

    If you've been using it for a little while, you're going to have records of things, and that will help you figure out what you can expect out of the future. The reports are your friend. Dive into them as soon as you have at least 3 months in YNAB, and the more time you have in YNAB, the better that information will be for you. You can look at your average costs for things like groceries, eating out, gas for the car, the power bill, anything the is variable. This is what really shifted me from floundering around (and WAMing constantly) to actually being able to keep things covered for the long term.

    Car repairs are hard because they seem to come unexpectedly most of the time, and often cost a significant amount of money. There is quite a bit of small maintenance that can be done by yourself - oil changes are NOT hard, and youtube is your friend when it comes to learning to do it. There's LOTS of info out there for how to take care of the basics yourself, which can save a LOT over time, and will improve your car's performance (thus reducing some of those surprise maintenance costs!). It might not be the most enjoyable way to spend a few hours, but it saves money and improves the longevity of your car.

    I agree with some of the other advice - let the debt be what it is for the moment, and focus on making sure you don't back slide further. Paying down debt only to need to use credit to keep your basics covered isn't helpful in the long run, and I think it is more stressful that way.

    Explore balance transfers, if you have decent credit you should be able to get one (here in the US Capital One has REALLY helped me out and helped me build credit when I had nothing as an almost 30 year old adult). They generally charge a 3% balance transfer fee, but there is 0% interest during the promotion. You do need to pay attention and make sure that you either roll it into another balance transfer before the promotion ends (like seriously, put a reminder in your calendar!) or be prepared to pay it off so that you're not hit with the interest. Many cards will offer promos, though, so even if you don't pay it off by the end of the time frame, there'll be another offer somewhere else. My recommendation (after having done probably a dozen different balance transfers over the years to juggle debt...) is to use whatever card you open for the balance transfer ONLY for that, don't put any purchases on that card at all. Use whatever other card you have for any purchases you need to make so that it is easier to know what the old debt was, and what might be new debt if you have a tough month.

    The other thing to keep in mind is that debt is not a reflection of you as a person. You are still a good person, and there's nothing wrong with you if you have debt. Letting debt sit in order to manage your money so that you don't go into MORE debt is a perfectly acceptable strategy (and stupid as it is, your credit score in the US is better if you have about 8-10% credit usage), and one that will save you in the long run. Getting to the point where you're ok with the debt sitting there and just chipping away at it while you focus on what's really important in your life (school!) will actually help you get your debt paid off faster.

    My BF has just about $3000 of credit card debt left from way back when we got together (it was "rolling" debt just like yours, it would get paid off by a loan or some windfall, only to end up building back up again). He's finally to the point where he mostly ignores it, and I think we're on the third balance transfer between his credit cards, and we'll do another one at the end of the year. But you know what? He's now finally in a place where he's able to pay about $125/month on it. That will get the balance below $3k by the end of the year when we do another balance transfer. It's also low enough that he can probably fairly easily pay it off entirely with his tax return this year. The end is in sight, finally, and it's approaching very quickly now that he's let go of the frustration of having the debt in the first place. It's just a meh thing now.

    I know this is long winded, and kudos to you if you've stuck it out! You've got this, and you'll get through it, and come out the other side in an amazing place!

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